By Martin Baccardax

Just when you thought it was safe to go back into the water.

Stocks haven't had a great run this week and were on pace for their biggest five-day slide since the "Liberation Day" lows in early April. But with the S&P 500 just 5% from its all-time peak, Nvidia earnings just around the corner, and the bond market settling from its recent tantrum, you could make a solid case for optimism heading into the Memorial Day weekend.

And then it happened.

President Donald Trump, fresh from hosting a controversial dinner for well-heeled meme coin investors last night at his Mar-a-Lago residence, took to his social-media platform and fired off two messages that touched on his go-to theme: tariffs.

Likely reacting to a report that Apple was looking to expand its India-based supply chain, Trump warned the tech giant would face a 25% levy if the iPhones it sells in the U.S. aren't made in the U.S.

Trump, who in 2018 said he was a 'Tariff Man," followed that missive with a threat to impose a "straight 50%" tariff on imports from the European Union, citing what he has long claimed are unfair trade practices, currency manipulation, and the targeting of American companies by the region's competition authorities.

Markets reacted in kind, taking a sleepy pre-long weekend premarket into another roiling tariff casino, with futures contracts tied to the S&P 500 now suggesting a near 100-point slump for the benchmark.

The market's benchmark volatility gauge, the CBOE Group's VIX index, surged more than 15% to 24.09 in the wake of the president's remarks, suggesting traders are now expecting daily swings of 1.5%, or 88 points, for the S&P 500, a 37.5% increase from earlier this week.

The merits of the president's case are, for the most part, besides the point at this stage, and markets have largely stopped debating the veracity of his claims or the impact that his threats might have on growth prospects in the world's biggest economy.

What they can't ignore, however, is the impact they're likely to have on corporate profits, be it in terms of Apple's bottom line or that of the myriad U.S. companies that rely on overseas sales to drive overall earnings.

They also can't discount the fact that corporate leaders, try as they might, aren't able to insulate their companies from this tariff-theme wroth.

Apple CEO Tim Cook, like many others, donated to the president's inauguration fund and attended the event in Washington, sitting near to Meta Platforms' Mark Zuckerberg and Amazon.com Chairman Jeff Bezos, and unveiled a massive $500 billion U.S. investment plan in late February.

It hardly seems to matter now.

Apple stock was down 3.1% in premarket trading, a pace that would drag one of the world's most valuable companies deeper into bear market territory.

Investors, meanwhile, will be left hanging into the early spring holiday, with the S&P 500 at risk of losing a big chunk of its hard-fought May gains as another round of tariff angst, alongside recession worries, inflation pressures, and a bond market freakout adding to the rising wall of worry.

For a man who enjoys a round of golf as much as he does, Trump sure knows how to ruin a good Memorial Day weekend.

Write to Martin Baccardax at martin.baccardax@barrons.com

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May 23, 2025 08:45 ET (12:45 GMT)

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